The Plight of Co-Owners of Property

By 4th January 2024Real Estate
Co-Owners of Property

As society has evolved and developed the boni mores of our present time, have progressed to such an extent that we find more commonly than ever, that parties do no longer so readily opt to be joined in matrimony, nor opt to enter into a life partnership agreement or civil union, but instead opt to live together, and incur debts and liabilities jointly, acquiring assets without having any valid agreement in place regulating such relationship.

Due to the very nature of the relationship, the judgment of the respective parties tends to be clouded, and irrational decisions are made, with far-reaching consequences being an eventuality upon deterioration of the relationship.

It is an everyday occurrence to see unmarried parties jointly apply for a bond, not fully understanding the legal implications and consequences thereof.

Without a written agreement in place, it is ipso facto accepted that the parties will be jointly and severally liable for servicing the bond repayments. That being said, many individuals do not appreciate the fact that they are joint-owners servicing the bond, the bond provider is not bound to enforce the servicing of the bond on a 50% ratio, as this is completely discretionary between the parties, and omitting to conclude a written agreement ascertaining the applicable ratio, leaves you quite exposed.

Recently I dealt with a scenario in which the parties in a relationship, opted to purchase a property jointly. For the duration of the relationship, the parties blissfully resided in the property, however when the romantic relationship broke down and it was then subsequently terminated, one party then left the property, leaving the other party to service the bond payments and take care of the general maintenance of the property.

Neither party noted the importance of addressing the elephant in the room, being that both parties’ names still appeared on the bond documents, as the property was still registered in both their names, neither party has seen the need to clarify the issues which were inevitable in these types of situations.

It is only after a lapse of a few years, upon the party who initially left the household being joined in matrimony, that the status quo, the fact that both parties’ names are still registered to the property became an issue. Although the other party was duly discharging the obligations in respect of the bond repayments, it hampered the now wedded party’s credit profile, as it created the illusion, that the party had more expenses than what the true state of affairs were.

The aggrieved party then decided to have her estate liquidated with the sole purpose of removing herself as a co-bond holder. Her co-bond holder however opposed such an application. Without the proper legal assistance, it culminated in the Receiver in the Application, obtaining a cost order against the co-bond-holder, as he failed to comply with the terms of the order to liquidate and allow the sale of the property to be facilitated, as the issue arose in the fact that he alone did not qualify for the bond which was registered over the property. The co-bond holder was under the misguided apprehension that because he serviced the bond for the period following the breakdown and termination of the romantic relationship between the parties, he would be able to recover half of his expenditure from the co-bond holder. This was however contrary to the Court Order in respect of the granted Liquidation Application, and what resulted was that due to the co-bond holder not being provided with sound legal advice, the property was sold, no profit was made from such sale, and the co-bond holder had to pay the legal costs associated with the Application, due to his misguided beliefs as illustrated above, which resulted in a cost order being awarded against him.

In the above illustrated situation, it is clear that the consequences of not correctly approaching the scenario where there are two bond holders or co-owners, who no longer desire to be so joined, could have far-reaching financial implications.

This then begs the question what is the right avenue to circumvent such a situation?

The answer is that in the absence of a written agreement, regulating the relationship between the parties in respect of assets jointly acquired, you can approach the court, using an Application, termed the actio communi dividendo, which affords the court wide discretion, to make an order in such instances of joint ownership, which they deem to be fair, just and equitable in the circumstances.

In the above type of Application, the Applicant is entitled to request the following:

  • Subdivision of the property if feasible;
  • Transfer to one of the co-owners against payment of a specified price to the other owners, however where the property is still subject to a bond, this relief will still be subject to the party seeking ownership, solely qualifying for the bond, based on their financial position;
  • In the alternative to the above, you can request that the court order that the property be sold and the profit from such sale to then be divided between the owners thereof. The court can go further than that as the court is afforded the discretion to make any equitable adjustment in respect of the percentage of the profits which each party will receive, bearing in mind whether one of the owners benefitted financially from the property or incurred expenses in respect of the property.

It is clear that if you find yourself in a situation where you are a co-owner of a property, be it bonded or not, in the absence of an agreement regulating the relationship, there is recourse available to you if you wish to no longer be co-owner of such property.

Please do not hesitate to contact our offices if you find yourself in the above scenario, or if you wish to circumvent it altogether by putting the relevant agreement in place, as we are willing and able to assist you.


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